Big Oil Loses Interest in Antrim Shale as Production Drops

Once one of the major natural gas sources in the US, Michigan's Antrim shale is losing the interest of some of the country's big oil and gas companies as investors move to exploit more productive locations, stated a new report by GlobalData.

The latest report states that in recent years natural gas production from the shale has been decreasing, while a national overabundance has led to a decline in gas prices, thereby largely impacting investor interest in the shale.

Production in the shale stood at 131 billion cubic feet (Bcf) in 2008, but this figure has been steadily declining, only reaching 85 Bcf last year. By 2020, GlobalData predicts this figure will continue to fall and stabilize at approximately 62 Bcf.

As a result of the shale's maturation, major oil and gas firms have divested their stakes and moved to acquire resources in newer shale plays with greater potential. From a total of 1,446 in 2006, the number of permits issued for Antrim Shale development dropped dramatically in 2011 to just 43, as major oil and gas players have increasingly redirected capital expenditure to more promising locations, such as the Barnett Shale, Bakken Shale, Marcellus Shale, Niobrara Shale and Haynesville Shale.

Only two of Antrim Shale's top 10 producing companies have actually increased their volumes of gas production from the shale over the past two years, with Linn Operating Inc. and Chevron Michigan producing 13.9 Bcf and 8.3 Bcf respectively in 2011 – although neither company had gas development projects in the shale previous to 2010. In February of last year, Chevron entered in the Antrim shale and has since marked its presence in the play with the acquisition of Atlas Energy Inc.

However, the other once major Antrim Shale gas producers such as Terra Energy Corporation, Ward Lake Energy and Muskegon Development Company have steadily decreased their gas production from the play over the last few years.



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